Audit (A-01-11-01502)

Executive Summary

We could not determine whether $2 million in American Recovery and Reinvestment Act of 2009 (Recovery Act) grant costs claimed by North Shore Community Health, Inc. (North Shore), was allowable under the terms of the grants and applicable Federal regulations. North Shore did not track and account for Recovery Act expenditures separately from other (Federal and non-Federal) operating expenses; therefore, it could not demonstrate that it spent Recovery Act grant funds for allowable costs.

This deficiency occurred because North Shore did not (1) maintain a financial management system that provided for accurate, current, and complete disclosure of the financial results of its Recovery Act grants and (2) separately track and account for Recovery Act funds.

We recommended that the Health Resources and Services Administration (HRSA) require North Shore to refund $2 million to the Federal Government, or work with North Shore to determine whether any of the costs that it claimed against Recovery Act grants were allowable, and ensure North Shore (1) develops a financial system that provides for the accurate, current, and complete disclosure of the financial results of each HHS-sponsored project or program and (2) tracks and accounts for each grant's expenditures separately from other operating expenditures. North Shore stated that it adjusted its internal financial reporting process to be in compliance with Federal requirements.

Under the Recovery Act, P.L. No. 111-5, enacted February 17, 2009, HRSA received $2.5 billion, including $2 billion to expand the Health Center Program to serve more patients, stimulate new jobs, and meet the expected increase in demand for primary health care services among the Nation's uninsured and underserved populations.